EU Orders Spain to Scrap Tax Subsidy for Foreign Acquisitions
January 12th, 2011
Spain must abolish a tax measure that subsidizes domestic companies that buy stakes in firms based outside the European Union, EU regulators said.
The tax provision amounts to a “clear and unjustified advantage” to the Spanish-based companies, the European Commission said in an e-mailed statement from Brussels today. Spain must recover aid granted through the tax measure since December 2007, the EU regulator said.
The commission, the 27-country EU’s executive arm, has been investigating the tax provisions since October 2007 because of concerns that they may distort competition. Spain already scrapped measures for acquisitions in other EU countries after being told to do so by the commission in 2009.
Spain will be allowed to continue to apply the measure for stock purchases in India and China, the commission said. These two countries have “fiscal and other legal obstacles” that justify the Spanish measure, it said. www.bloomberg.com
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